Footware Porter Analysis
Porter's Five Forces analysis of the industry.
Porter's Five Forces model focuses on the external environment, and how it may impact on the operations of the businesses in a particular industry.
The threat of new entrants into the industry is low. The entrance barriers are high in that the capital requirements are high due to up-front advertising and research and development. Also, economies of scale in production will be difficult to reach due to the difficulties of penetrating the market which is dominated by the large five; Nike, Reebok, Coverse, LA Gear, and Stride-Rite. Furthermore, it will be almost impossible to achieve product differentiation in terms of brand identification and product difference, since the "big five" set the trends. Also, distribution channels, and dealers are in many cases tied-up by existing competitors. The bargaining power of consumers is medium to low. The purchases of the buyer group is not concentrated in large volumes, and the products that the consumer purchases are not standardized. Furthermore, the industry sets and creates the fags and determines what is "hot".
The bargaining power of suppliers is medium to high since it is dominated by relatively few companies. The product is unique, and the switching costs are high. It is also possible for the suppliers (especially in foreign manufacturing) to integrate forwards into the industry's business (in overseas markets) and become a rival to the industry.
The threat of substitute products is low. The industry is upgrading the products frequently to cope with flashy fads and the "hottest" fashion. There are not too many close substitute products to athletic shoes. What else would you wear when you run? Of course, multipurpose shoes such as "cross trainers" may impose a possible substitute threat to the current highly diversified range of athletic shoes on the market.
Jockeying among existing competitors is extremely high. Competitors are...
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